New Obstacles for California Employers after “Black Swan” Internship Case

July 20, 2015 - California internships in the past have been viewed as a trade-off between well know, desirable employers and young students interested in the industry. The employers get workers and the interested students get experience in their chosen field. Many college students and recent graduates vie for a limited number of highly coveted internship positions in Hollywood and Silicon Valley. Companies offer unpaid positions (internships) and students and new grads vie for the chance to start building a relevant network. The simultaneously beneficial nature of the internship means there has been a limited amount of litigation related to the arrangements. But as of 2013, there’s a ruling that is affecting the symbiotic relationship between employers and interns.

In 2013, a federal District Court in New York found that interns of the movie Black Swan were entitled to pursue a class action. The class action seeks millions of dollars for unpaid wages, overtime, etc. Studios and tech business employers are taking note.

With Glatt v. Fox Searchlight Pictures, Inc., the U.S. Court of Appeals for the Second Circuit attempted to answer the basic question, what is an intern? There are interns across the county, but there is a surprisingly limited amount of actual law related to this particular workplace relationship. The Second Circuit’s decision actually turned on a case from almost 70 years ago regarding railroad apprentices. California employers are discovering that the direction this particular discussion is taking holds both good news and bad news for the future of their workplaces.

The Good News: According to the Second Circuit’s decision, wage-hour cases in relation to interns are rarely subject to resolution in a class action or collection action due to the highly individualized nature of the setup.

The Bad News: Fox, the studio that produced the movie, convinced the court to impose a test to determine who the primary beneficiary of the intern/employer relationship is. This test was to be used to determine whether the worker was an intern or an employee. The court put together 7 non-exhaustive questions for a trial court to consider when attempting determining if a worker is an intern or an employee.

1. Is there a clear understanding that there is no expectation of compensation for work performed?
2. Does the internship offer any hands on training or clinical experience as would be provided by a school?
3. Is the internship a part of the coursework of the “intern”/will they receive academic credit?
4. Does the internship coincide with the academic calendar?
5. Is the internship limited to the time period during which the setup would provide beneficial learning opportunities?
6. Does the intern’s work compliment or replace the work of paid employees?
7. Is there a clear understanding that the intern is not entitled to a paid job once the internship is completed?

The primary beneficiary test is bad news for employers who offer internships with limited educational benefits for interns or for those whose interns are performing work that would be completed by employees in their absence. The opinion of the court indicated that the more menial the work assigned to an intern, the less likely that they would legally be considered an intern. Employers, particularly those in tech and entertainment industries, are finding that they need to rework their model in order to suit this new finding. It’s the first significant appellate opinion on this issue, but it will not be the last. There are other intern related cases on appeal and awaiting decision by other courts throughout the nation. In California, the opinion will probably have a fairly lasting impact. California employers are already hustling to bring their internship programs up to snuff. Interns considered employees might very well begin seeking to recover unpaid wages, overtime, etc. in accordance with the penalties of violating the California Labor Code.

If you are unsure what constitutes a valid internship or if you need additional information regarding being misclassified as an intern instead of an employee, contact the southern California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

Does Your Internship Violate Wage and Hour Laws?

Interns work hard. The idea of an internship as we know it in modern society could be compared to the medieval apprenticeship. During an apprenticeship during medieval times, skilled laborers or craftsmen would accept a young person to whom they would teach their trade. In exchange that young person would work for the teacher after a certain amount of time had passed.

The difference between a medieval internship and a modern internship is in the amount of exploration that is available. An intern isn’t bound by their agreement to work for the employer that is providing them with the chance for training/experience in a certain field. When the internship is over, many do receive job offers from the individual or company that provided them with the internship, but they are not liable to accept the offer. Many students start early and complete a few internships early on to aid them in their educational/career path choices. It allows them to get a feel for what career they may like to pursue. Internships they accept later on in their educational career can be used to build up experience in their chosen path. Some internships are paid, but some are not. This can make it difficult to determine whether or not your internship is in violation of any wage and hour laws which is important because they are the only thing that keeps employers from taking complete advantage of the vast array of individuals looking for internships.

If you need clarification on the issue, consider these issues. The unpaid internship should be for the benefit of the intern, not the employer. It should be comparable to training you might receive in an education tract.  An “intern” should never take the job of a regular employee and should work under close supervision by experienced staff. As previously stated, the intern shouldn’t be required to accept a position at the company at the end of the internship. An employer should derive no immediate advantages from the use of an intern. And it should be made clear from the start that the employer has no intention of paying the intern for their work.

If you are still unclear, get in touch with an expert California wage and hour attorney at Blumenthal, Nordrehaug & Bhowmik. We can help you determine where your internship stands in relation to current wage and hour laws. 

New Trend in Employment Law: Unpaid Intern Class Action Suits on the Rise

A New York federal judge, U.S. District Judge Paul G. Gardephe, recently certified a class of approx. 3,000 Warner Music Group Corp. interns claiming misclassification as exempt from minimum wage and overtime requirements. The case is based on a violation of the Fair Labor Standard Act and depends on the allegation that the plaintiffs performed the same tasks as nonexempt employees. Plaintiffs were uncompensated interns working in a variety of Warner Music Group Corp. departments (radio promotions, product development, artists and repertoire, etc.)

Unpaid intern class action lawsuits such as this are a growing trend in wage and hour litigation. Plaintiffs are unpaid interns simply suing for pay under the Federal Fair Labor Standards Act or FLSA. Recent filings by unpaid interns have made allegations against a number of large corporations including: Hearst Corp., Fox Searchlight Inc., the “Charlie Rose” show, etc. In one instance, an intern who was paid a stipend filed a class action lawsuit alleging that the stipend he received was insufficient according to wage and labor laws. When the amount of the stipend was compared to the amount he would have earned for hours worked at federal minimum wage, the number fell short of minimum standards set up by the FLSA as well as New York state law.

Interns are historically underpaid (or not paid) and overworked. The current trend in unpaid intern class action lawsuits seems to indicate that this “accepted practice” may be going out of style.

For more information on identifying whether or not your internship violates wage and hour laws, contact an expert at Blumenthal, Nordrehaug & Bhowmik.